Elderly and disabled people currently face a “postcode lottery” in home help and residential care services, many of which are already starved of funds, it said.

As Britain’s population ages, workers should be encouraged to take out private insurance to cover the cost of their own care in old age.

But it will be “vital” for grown up children to spend more time looking after their elderly parents and other relatives as demand outstrips supply, the inquiry said.

The warnings came in the first report from the Department of Health’s Commission on Funding of Care and Support for elderly and disabled adults. The commission was set up by the Health Secretary, Andrew Lansley, and will make final recommendations next year.

Currently, most pensioners with assets of £23,250 receive no state aid to cover the cost of home help or residential care, and many are forced to sell their houses.

Andrew Dilnot, the economist and broadcaster who chairs the commission, warned of “difficult trade-offs”, as more resources would be needed from the Treasury, individuals and volunteers in future.

In particular, family members who care for ageing relatives will face an even greater burden, and will require support, he said.

Over the next 20 years, grown up children are expected to spend 13 per cent more time caring informally for relatives, while demand for such care will soar by 55 per cent.

“We know the contribution of informal carers is vital to our system now, and will be so in the future,” the commission said in a call for evidence.

“Any reformed system will continue to be a partnership in its broadest sense – with both individuals and the state continuing to contribute to the costs of care and support.”

Under the current system, patients face wide variations in their eligibility for state help with the costs of care across England. In some areas only people with the severest disabilities are entitled to free home support or residential places.

The commission said: “One of the key concerns people have is the ‘postcode lottery’ of care, where entitlement to services differs across the country.

“We know there is some variation in the services people receive in different areas – this offers flexibility and responsiveness to local conditions, but it can be perceived by some as inequitable.”

Last month, Mr Dilnot told The Daily Telegraph that the middle-classes could be asked to take out private insurance to cover the potential cost of their own care in later life, so they would not have to sell their homes.

The report confirmed that insurance firms should make more products available so that people can be “protected against the future cost of care and support”.